Role of technology in the merchant marketplace (final)

Lisa Arcangeli: What about cloud computing? What is it? Does it have a future in a merchant’s business?

Arthur Duffy: There is no shortage of definitions. People have a tendency to believe that the cloud is affected by software applications. But, the cloud embraces anything to do with a process or an infrastructure that you can process by using the internet. Growth in this area is enormous.

The attraction for organisations is that they can expose themselves to mechanisms and infrastructure and they can effectively implement that into their own business without having to understand what it is.

The biggest challenge we have come across for those people taking this route is that, while they like the fact they can run things using the cloud, when it comes to personal data, they want that in the next office.

Cloud computing has come from nowhere, but it is increasing. The majority of our bisTrack customers will have a mixture of cloud and in-house applications, all talking to each other.

Kevin Fenlon: I was talking to a small supplier who uses the cloud. He said, “if I lose a device, I buy another, input my login and I have got everything back”. There is no disaster recovery like we have in our organisations. It is simple.

Lisa Arcangeli: What are the dangers? Losing information? Security?

Peter Buttle: Power cuts?

Arthur Duffy: There is danger in everything; you have to build the resilience in. I use three devices. I never think about backing up. They are all synchronised. Everything I need is on the cloud.

I have come across many an organisation that thinks it has security and back-ups in place and never tests them. The moment it comes to invoke that security, it finds it is not there!

Kevin Fenlon: We all used to run laptops. Now we have people working from a central server in all the key documents and the devices are just a gateway for getting in.

As soon as merchants think the information is going out of our organisation, we believe someone else will be looking at that or interrogating it.

Arthur Duffy: The amount of data being stored is growing all the time. We need to get to that data quickly and cleanly and consistently. That is the challenge.

We have lots of customers who sometimes struggle to produce business intelligence or management information. No-one has said it is a bad idea or that they do not want it, but no-one is prepared to do it because they feel they are allowing someone to look at their information.

Tom Mason-Elliott: I have no doubt that in the not-too-distant future, we will all be running our businesses in the cloud. There are so many economies of scale to be had from putting all those services in one place and manipulating data on that scale.

We fear data loss and power loss, but those cloud-based infrastructures are more capable of being built in a resilient way. In five or 10 years, I would be very surprised if many organisations had a server room. We will have outsourced that capacity and hardware will not matter – just the access to that data and the programs that run it.

Peter Buttle: The internet was built for that very reason – for the information to be so scattered that it would be difficult to strike and knock it out.

Tom Mason-Elliott: Hardware is still very relevant for us, but in future we will just outsource it.

Peter Buttle: We will pay on the basis of how much we use it. It will be utterly scaleable. Let somebody else worry about maintaining it. It is where we would all like to be as builders’ merchants – not in IT!

Arthur Duffy: The challenge we all have with technology is that it is constantly evolving. It is an ongoing transition and lots of companies do not buy into that at present.

Kevin Fenlon: Merchant Pages is a great initiative to create a common approach. The model of the industry has changed. There is a role for all of them. It is clearer now about BMF’s role.

NMBS and Unimer is seeing that the buying groups have negotiated their deals. But, there is a big gap in getting that data to work and there is a role for them to play to help.

Tom Mason-Elliott: From a technological point of view, if we move forward as one industry with things like GTINs or EANs, there is a key role for facilitating this to help us increase our efficiency as businesses from a back-office perspective. It becomes more difficult from a sales or added value point of view because those tactics are how we each gain our own advantage.

Arthur Duffy: There is no shortage of information. The real question is: do you have someone within the organisation to drive it forward to make a business differential?

There are lots of juries out on social media, or e-business, but it is ultimately up to you as merchants to decide how you want to make it work within your business and who will drive it forward. Nine times out of 10 it falls to the financial director or the accountants in a company to make those decisions.

Kevin Fenlon: Things are moving quicker and faster than they have ever done before. I cannot remember when we last sent a Fax.

The intranet is now our company filing cabinet. We have common themes in how we file our information. The problem is that people use the intranet to catch up on all the information.

Arthur Duffy: The way we used email five years ago and how we manage it today is completely different. It is becoming unmanageable for a lot of people because everyone is getting copied into everything.

Peter Buttle: Unlike with the online traders, where you cannot communicate with them on email because you will not find an email, you have to dial a premium telephone number.

Tom Mason-Elliott: You put all this information on the intranet and you still get people asking where they can find the information. It has been on the intranet for two years and yet people still want it sent to them as an email.

Peter Buttle: Kevin, does your system cater for ordering and invoicing through a buying society?

Kevin Fenlon: It would not be that easy. We have an RGB intranet, a CBA intranet, a CRM and they all do different things.

Arthur Duffy: You have information about the buying groups and that repository of information can always be better. Someone has to be the gatekeeper for that.

Peter Buttle: It is worthwhile for you as a software developer to look at the issues that are hitting merchants. We have groupings, which means one solution could be a potential answer to many other merchants. It is all very well having better information from the buying group intranet, but it is not as robust or as checkable knowing that I can press a button to find out what it is.

Our intranets are the same, but if our software provider looked at what we need from the current way of trading, they could see we have all the detail and have a process that needs to compare what the supplier is telling the buying group through their input and a reconciliation process that is very simple.

We all have the same problem: we have complicated rebates and have to tackle whether we are getting the money and if we are getting as much as we should be.

Chris Hayward: If it is invoiced via NMBS, we have created a feed with eBiz where you can do a comparison with what the suppliers put on.

Peter Buttle: There is no functionality that I know of that caters for us building a reporting system dedicated to knowing what all of our credit limits are.

Arthur Duffy: This is a good example of passing information across different systems, whether it is buying groups or suppliers. Now, you are saying we want things ring-fenced, but you also want to touch outwards. You can do that internally with what you have got or we could engage with a buying group.

Peter Buttle: It makes sense if we could flag up communal problems. A software developer could come up with a solution to deliver something that has so far not been delivered.

Arthur Duffy: I could mention two or three significant buying groups we approached to ask them if they would find it beneficial to provide information back to members and we had no response to that.

Chris Hayward: We can provide information on a group basis. It is not available on individual merchant systems; they would have to export it to a central hub. We already have the information and the reports on buying-group turnover.

Tom Mason-Elliott: It comes back to global location numbers. You set up a system like that and it has to have a standard definition for the supplier and of who we are. So, when the system knows who we are, we would get an email once a month that says, as a group, you have spent this much with a buying group or a supplier and they owe us this amount of rebate, so we only have to check if there is an issue.

Peter Buttle: Would it make sense to have GLNs for all members?

Chris Hayward: In theory, we could do it, but Unimer would have their GLNs. If I allocated it, then it would have to be registered with GS1 Malta. But, I cannot register GLNs on behalf of other people because it is an address, an identity.

Lisa Arcangeli: We mentioned social media, briefly, but is there any traction for it in your day-to-day business?

Twitter is a full-time job. You are constantly monitoring, feeding, re-tweeting. LinkedIn is useful for generating forums. Facebook is more static.

Kevin Fenlon: We are actually a very social industry.

Tom Mason-Elliott: The downside is if somebody says something negative.

Kevin Fenlon: My worry is that the advice given to customers can be less technical, like that given by the sheds. The positives are that you can get some really good messages out about your business if you manage it correctly.

Chris Hayward: Twitter is full-time. If you are not doing it full-time there is no point. Who is going to pay a resource to do Twitter all the time?

Where I have seen it being used effectively, is with maintenance teams, working on jobs late and when finding a fault, everyone gets Tweeted. Lots of engineers use it. Celebrities employ people to Tweet on their behalf as do footballers.

Arthur Duffy: Certain people have had success with it. It is a toolkit that lets you communicate with people quickly and effectively. If there was a return for the business, you would not think about the cost of employing a full-time person. It can be a cost-effective way of reaching people you would not normally have access to.

Chris Hayward: If you are a merchant, associated with a local football club, around match day you could do quite a bit of advertising.

Tom Mason-Elliott: We support the Danny King Appeal and have 600 followers. We have 30 people who can post things to our account. If we have a new product, we can put that on.

Chris Hayward: I do not think people want to be sold to…they will soon de-list you.

Arthur Duffy: It has to be adopted for the right reasons.

Kevin Fenlon: If you sat down and listed all the forms of communication you could have, you would think “I should get out and see a customer”.

Chris Hayward: All this has destroyed my Sunday reading. You want to skim the papers electronically. I don’t enjoy reading anymore.

Peter Buttle: If you have a customer in front of you, you need to know what it is he wants. It is not necessarily the best price. If the customer wants what he wants right now, that is the key.

Tom Mason-Elliott: There is always a risk for small items like power tools, because merchants will constantly come under attack from the internet.

And the same applies to specialist organisations who offer a huge range of one particular product and who offer next-day delivery.

As merchants, we offer a massive range of goods in a location that is accessible to them. The products are heavy, big-volume products.

I cannot think of a business model where someone could set up a business site that would enable them to compete with us. They would have to phone a number of suppliers to get those goods and they would have to travel down from a distribution centre that is miles away, which will add to the cost.

Kevin Fenlon: An example is car showrooms. Everybody said they would not be around for much longer. But, people want to see these things. Where our added value continues to be an element of engagement is how we solve a problem – and the social side of it.

I think online trading will be a threat or an opportunity, depending on how it is handled.

Tom Mason-Elliott: I see the technology far more as an opportunity to lock customers in. ‘You are doing something so different and you are making my life so easy that I do not want to go to anyone else. You have integrated with my back office’ – it simply locks customers in.

You try to engage every way that you can by making your website easily accessible and, going forward, there will be greater use of video, showing products. But things will have to get simpler.

There is talk about things becoming more hardware-oriented, like the iPads and the new Galaxy phones.

Peter Buttle: I am with Tom on the future benefits of using IT to enhance your business. I do not think we can ignore the poor quality of data. We have to get smarter. We cannot sell online if we do not know – to the dot – what we have in stock.

Kevin Fenlon: It goes back to product codes and pictures and, if you scan it, the system will book it out and replace it.

We are doing rotation and stock chase all the time to make sure our stock is right and to ensure we address the pilferage issue, which is a merchant-wide industry problem.

Lisa Arcangeli: The industry remains fragmented. What seems simple is, in fact, most complicated. What is certain is that merchants are all very individual and sophisticated businesses.

There is a will to change, albeit in specific ways, and not always in the manner one expects.

This article first appeared in the March 2013 issue of Builders' Merchants News.

With recent long range weather forecasts suggesting the UK could be facing the coldest winter for almost a decade, roof systems manufacturer Marley is urging construction workers to get prepared for freezing winter temperatures.